A feasibility study at the Lynn Lake gold project, owned by Alamos Gold Inc., declared an initial proven and probable mineral reserve of 26.8 million metric tons (mt) grading 1.89 grams per mt of gold, containing 1.6 million ounces (oz) of gold. The study also estimated an average annual gold production of 170,000 ounces over the first six years and 143,000 ounces over the first 10 years with life of mine production of 1.5 million ounces at the project in Manitoba, Canada.
The study also estimates life of mine total cash costs of $645 per ounce of gold and attractive mine-site all-in sustaining costs of $745 per ounce.
The initial capital estimate for the project is $338 million and total life of mine capital, including sustaining capital and reclamation costs, is $486 million.
The estimated after-tax net present value is $123 million at a 5% discount rate and an after-tax internal rate of return of 12.5%, representing a 4.6-year payback.
The company also identified a number of opportunities to enhance the overall economics of the project through an evaluation of a smaller, higher grade mine plan, employing contract mining, and incorporating exploration success over the past year, which has not be factored into the feasibility study.
“We acquired the Lynn Lake project in 2016 for $20 million and with the completion of the feasibility study, have outlined solid base case economics for the project with an after-tax net present value over $120 million,” said John A. McCluskey, president and CEO. “As we advance the project through permitting over the next two years, we see excellent potential to further enhance its overall economics through a number of avenues, including incorporating recent exploration success.”
“With its location in one of the best mining jurisdictions in the world, Lynn Lake is an important piece of our longer-term growth strategy,” he added.
The Lynn Lake project is comprised of the Gordon and MacLellan deposits, which are located approximately 30 kilometers apart. The two deposits will be mined using conventional open-pit mining methods with a centralized processing plant and tailings management facility to be located at MacLellan.